1. The Power Vested In The Litigant.
Litigation in the American system of courts is expensive. But one gets what one pays for. Our legal system is by far the most effective in the world, with a world wide reputation for integrity and effectiveness. And expense.
The American system of law, like the American economy, gives the individual tremendous power and latitude in conducting a legal action. Unlike Europe in which the Court takes a proactive role in controlling both the case and the development of evidence, or much of Asia where the courts are seldom utilized due to custom and ineffective enforcement procedures, the United States Constitution and the various states have created a system where, if one wishes to spend the money, one can compel parties and witnesses to respond to extensive discovery proceedings and a public trial before a jury of one’s peers. One decides for the most part how to develop the case, what evidence to introduce, and has the power to investigate to obtain evidence and to cross examine witnesses long before the actual trial begins. See our article on American Litigation.
It is fair to say that no legal system in the world vests such power into the hands of its citizens and provides so many effective means to discover evidence and personally present the results before an objective Trier of fact. As more than one judge has said to the lawyer, “It’s your case, counsel. You decide what to put before the jury.” Such a statement would be unheard of in 90% of the Courts in the world and is a right treasured by most Americans.
Most people who come into a lawyer’s office concerning the possibility of filing suit may be classified into two large groups: those who have already decided to sue and simply want to get the litigation commenced and those who are unsure if commencing litigation makes sense.
With those who have already decided to file suit, the question they confront is how best to progress to judgment with the most efficient cost benefit allocation of resources. And for those being sued by someone else, there is little hesitation about what their next step must be, since they have already been forced into court.
But for those pondering whether commencing a legal action makes sense, they confront a bewildering array of variables all of which seem to cost money and create risk, many of which will take years to fully develop, and all of which seem to require very expensive professionals to implement. Or, as one client put it, “The right to file suit seems to be the right to jump off a cliff and hope my enemy is below me when I hit the ground.”
It’s not that bad, of course. If it was, no one would ever file suit. But the germ of truth in that statement is the fact that once one commences legal action one becomes immersed in a system that is not entirely subject to one’s own control.
The Courts exist to create a system by which individuals may seek justice by trying their cases after extensive rights to discover evidence. It is not made for efficiency. It is not made to save money. Developed over centuries, it presumes that two or more litigants, using their private resources, and arguing before an impartial Trier of fact, will be able to achieve justice and will consider the cost of justice well worth it.
Each trial costs the State or Federal government tens of thousands of dollars. A court room and judge, bailiff, clerk and reporter are provided by the State or Federal government for free. The State assumes that the parties should therefore pay the other costs of the litigation. The government provides the arena: the litigants pay the costs of developing their own case and trying it in the arena.
And those costs can be substantial. The reader should review our article on American Litigation to get a general idea of the steps to judgment in this nation. Suffice to state that the cost of discovery described in that article is often tens of thousands of dollars, sometimes hundreds of thousands of dollars, and few trials occur costing less than thirty to eighty thousands dollars to complete. Since one party can easily force the other party to spend money defending depositions or responding to motions brought in court, one is often forced to match dollars spent by the opponent even if the case is not worth the money. See our article on Grudge Fights in the Courts.
2. The Cost Of The Power Available In The Courts.
As any business person can tell you, the Courts are extremely powerful and useful tools that anyone in business and individuals who are wronged can use with good cost benefit results. It takes calm and clear thinking to consider, plan, and implement a litigation plan that is of benefit and the possible maneuvering of the opponents must be factored into the strategy.
Litigation is the civil equivalent to war. One seeks to outmaneuver, confuse and ultimately defeat an opponent using the various weapons the law makes available. One allocates resources, one hires generals (senior lawyers) and soldiers (associates and paralegals), one wins or loses skirmishes and battles on the way to seeing if the overall war can be won.
And one often makes peace long before the final battle, either by convincing the other side of the strength of your case, or by creating a case that makes their own downside so dangerous that your settlement proposal is preferable. At other times, a weakness in your own case appears over time and you must decide to make peace to avoid further loss. Indeed, most cases settle before trial…but after discovery is completed.
Such a battle can be thrilling, indeed, intoxicating. The intensity of a trial is the stuff of movies and television for a very good reason…it often is dramatic, riveting and satisfying in a way that normal life seldom can match. As one client told the writer after trial, “Now what can I possibly do after this that seems more than flat and boring?”
Contingency cases, in which the lawyer receives a percentage of the recovery, and semi contingency cases, in which the lawyer is paid a percentage of their usual hourly fees and receives a reduced percentage of the recovery, are common in certain types of litigation (personal injury, medical malpractice, anti trust) but are seldom used in most business, probate, real estate, and construction litigation simply because in such settings settlements and maneuvering for market share or other non-monetary goals are so often the underlying goal that the monetary recovery is secondary. (Often a case brought to protect a market may result in small recovery in terms of cash but tremendous long term value to a client-but which can not be reduced to a percentage recovery that could be paid to the lawyer. In probate disputes, one encounters agendas that have more to do with family dynamics than cash in hand, etc.). Put simply, most good attorneys are paid on an hourly basis and that is an economic fact of life each potential litigant must face.
Thus the wise litigant will, before the case commences, seek to obtain a good idea of what the price tag is likely to be so as to determine if the likely results are possibly worth it. And that analysis is not a simple one. This article shall seek to give some broad outlines as to appropriate criteria that should be applied.
THE CRITERIA
1. The Goal:
What do you want?
This may, at first, seem like an obvious question, but in our experience it is not. Few goals are simply black and white. While many business disputes are simply over money (they breached the contract and owe me money) most family disputes go far beyond money to family relationships and long buried slights that can make money simply a symbol for revenge or assertion of power long ignored by other family members.
Even in the business context, the answer is not always obvious. Seeking to protect a trade mark or protect oneself from unfair business tactics may actually be the apparent goal but the underlying goal may be to force a competitor to waste time and resources in a bitter fight that would otherwise be spent eroding one’s own market. And at times emotion can enter even the business arena as a litigant can be enraged at the conduct of a vendor or customer and wish to teach them a lesson long after the money that can be gained is exceeded by the cost of the fight.
It is vital for the wise potential litigant to carefully understand all of the goals both the litigant…AND the opponents…may have so that the “upside” of the litigation can be fully evaluated.
2. What is it Worth?
Now that you know what you want, what will you be willing to pay for it? This involves budgeting not only money but budgeting for time, for litigation will require involvement by oneself or one’s personnel both in the discovery stage of the proceedings and in the trial. This not only takes time away from other activity, but requires energy and concentration. (Of course the opponent faces the same issues as you do and that can be factored, perhaps, in your upside.)
This analysis should assume the matter goes all the way to trial. While ninety percent of cases settle, and while abandoning the claim may be possible if it gets too expensive, for the purpose of this analysis, one must assume a full scale trial may ensue and determine if the results are worth it.
A typical example: Assume a debt collection case against a solvent debtor who owes you fifty thousand dollars. Assuming there is no attorney fee shifting clause (awarding attorney fees to the prevailing party) and assuming the case is a simple one in which not much preparation will be required, thus not much of your own time in discovery. Clearly any result in which one receives more than the attorneys fees incurred is worth it. That also means that spending over fifty thousand dollars makes no sense-the case is “worth” somewhat less than fifty thousand dollars to you.
But let us assume the debtor is also a competitor who is underselling you with a key customer, possibly at a loss, in an effort to steal that customer. The value of getting a judgment to use to seize that competitor’s accounts may now be much greater than merely fifty thousand dollars. By forcing them to abandon the market or lose their resources to undersell you, you may save a customer worth millions in profit.
Or you may want to make an example of them to scare away other potential competitors.
Or to show our customer that these people are deadbeats not to be trusted.
All those factors become part of your cost benefit analysis so you can determine what the case is truly “worth” to you.
That is the type of analysis one must undertake.
3. What Will It Cost…and When?
The two main costs of litigation are the attorney fees and the out of pocket costs of experts, deposition reporters, filing papers, etc. Many of these expenses can be both anticipated and budgeted over time by experienced counsel, and while one is always subject to the vagaries of the opponent’s tactics requiring a change in the schedule, most cases do go along a predictable path. (This is also a good method to determine if your attorney is experienced enough to know how the typical case such as yours goes.)
A typical example would be that debt collection case above. The initial cost of investigating the claim, drafting the complaint and serving it can easily be estimated by an attorney, normally will take about a month to six weeks, thus that should be budgeted to require payment within sixty days. Most discovery then progresses over the next six months to a year and assuming the attorney predicts two or three depositions before trial, that cost can be estimated and assumed to occur over the next year.
No attorney can give a precise cost of most litigation precisely because the other opposing “general” will be engaged in his or her own counter moves. But a good estimate and time table for likely costs is normally possible and should be requested by any potential litigant.
4. Counter Claims and Costs of Same.
Once sued, it is common for a defendant to try to develop a cross complaint back both to give the plaintiff something to lose and because there may be causes of action that the defendant would not have considered worth bringing but as long as the defendant is in court, it now makes sense.
It is vital for the potential plaintiff to discuss all such possibilities with counsel since a valid cross complaint can radically alter the likely avenue of the case and greatly increase the costs…and the potential downside.
Often a statute of limitations may run for potential counter claims while the longer statute of limitations may not run for the potential plaintiff. That must also be factored into the strategy of when and if to sue.
If the likely counter claim is clearly invalid, it still must be factored in to some extent simply because it costs money to fight.
And do not assume the opponent will be logical in his or her own cost benefit analysis. It is possible that an emotional defendant, desperate to justify him or herself before others, will concoct obviously absurd counter claims that, even if likely to lose, will cost time and money to contest. Knowing the personality and emotionalism of the opponent can be a useful tool in determining if the fight is worth it. One elderly businessman known to this writer refused to sue an ex employee who had clearly violated his duty of confidentiality because “…the idiot loves the courts too much. Suing him is like touching a tar baby. I will win…but it will cost me a fortune to do so.”
5. Likelihood of Collection.
Winning does not only mean getting a judgment in most cases. It means getting money or property. An insolvent opponent or one likely to file bankruptcy may lose the case but win the war by making it impossible to collect. It is a good plan to run a full asset check on any potential defendant to make sure there is likelihood of actual collection. It is a good idea, if there is any doubt, to utilize investigators to obtain such a report prior to filing any truly expensive action.
The tools to enforce a judgment are powerful. One can attach accounts, sell property owned by the debtor, attach wages, even attach the debtors of the judgment debtor to have them pay the money directly to you. But such collection efforts take time and additional money and must be factored into the overall cost benefit analysis.
6. Collateral Damage.
The possible cost of litigation may not only be the attorneys or court costs or possibility of defeat. It can also be the adverse reaction of others in the market place or family who find the commencement of litigation a matter of reprobation. In certain markets, most notably in Asia, commencing litigation can be seen as an unethical act that can result in a business losing valuable customers. A wise litigant will carefully consider such reactions before commencing litigation.
It must be noted that often the collateral effect is to the benefit of the litigant. One client told the writer that he cared little if he won a particularly vicious fight against a copy right infringer since he was aware that a dozen other “thieves” were out there and he needed to show them that if he was “crossed, I know what to do to make them sorry…”
7. Other Means of Relief.
Given the above factors, it is always wise to consider if other methods outside of Court may allow effective relief. Such tools as mediation and arbitration or complaints to governmental agencies should be considered to be used instead of or in conjunction with filing a complaint. In some countries, speaking to a respected member of the industry or community can result in resolution of a claim and within families there is often an elder who can perhaps intercede.
And there is always the chance that a problem will resolve itself if you wait long enough. One embezzler was sued by our client but was arrested just before his deposition by the police after he stole from yet another victim. Our client was delighted though this ended the chance for a good judgment since the culprit would soon be in jail. “I never expected to collect…but wanted him off the streets. I’m satisfied.”
8. State of Mind: the Will to Fight.
Polonius in Hamlet put it well. Dread becoming involved in a fight-but once in, be sure the other side dreads you.
It is vital to have a state of mind to objectively and firmly engage in the litigation activity or one will soon find oneself buffeted by the actions of the opposing party. Once in the fight, one must participate with vigor and effectiveness, or, at the least, form a legal team with experience and skill and give them the resources and direction to win. This is often difficult for some people who feel that any dispute should be able to be resolved amicably or who do not want the often caustic communications in litigation to be part of their lives.
One hires the lawyers to handle the actual machinations in the legal arena and to engage in those very communications, but any good lawyer will want involvement and final decision making engagement from the client. It is, after all, the client’s case. This necessarily requires a continuing involvement by the client and a willingness to participate in that uniquely American activity of the civil trial. Some find it invigorating and interesting. Some can not stand even the thought of the combat.
But in making your cost benefit analysis, be sure to consider your own state of mind. Are you willing to fight for what you want in the courts and develop the type of thinking that will require?
CONCLUSION
It is no accident that access to the Courts was made a central aspect of the United States Constitution’s Bill of Rights. Almost all of them involve legal procedure and safe guards. Our civil courts are not only the constant subject of novels, movies and television, but a matter of deep interest throughout the world. They are as uniquely American as our method of capitalism and our freedom of speech and religion.
It was determined by our Founding Fathers to allow the public unfettered access to our courts to protect their individual interests and claims. It was assumed that a free people would need to have a tool to allow them to bring some of the powers of the government to bear to protect their own interests. That is, essentially, what our courts have become. If you are wronged where do you go? If you want to assert a right, where do you go? If someone breaches their duty to you or violates a contract signed by you, where do you go?
But, like any tool, it must be used with care and with knowledge. Used correctly, it can be the most effective and powerful tool any person can bring to bear. Used poorly, it can lead to turmoil and large expense without gain.
Using the criteria above and some good advice from professionals, there is no reason why the average person can not make an informed decision about whether to “unleash the Dogs of War.”